**UNITED STATES**


**SECURITIES AND EXCHANGE COMMISSION**


Washington, D.C. 20549





**Form 10-QSB**











[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2004


OR





[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from to





Commission File Number 0-25648








**AFG Investment Trust D**


(Name of Small Business Issuer in its charter)




**Delaware**  **04-3157233**


(State or other jurisdiction of (I.R.S. Employer Identification No.)


incorporation or organization)








**1050 Waltham Street, Suite 310, Lexington, MA**  **02421**


(Address of principal executive offices) (Zip Code)








Issuer's telephone number, including area code : (781) 676-0009








Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months


(or for such shorter period that the Issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X . NO  .








Shares of Class A interests outstanding as of November 12, 2004:   1,934,755


Shares of Class B interests outstanding as of November 12, 2004:   3,142,083








Transitional Small Business Disclosure Format: YES  . NO X .














































**AFG INVESTMENT TRUST D**





**FORM 10-QSB**





**INDEX**





PART I. FINANCIAL INFORMATION:
PageItem 1. Financial Statements (unaudited)Condensed Balance Sheetsat September 30, 2004 and December 31, 2003
3Condensed Statements of Operationsfor the Three and Nine Months Ended September 30, 2004 and 2003
4Condensed Statement of Changes in Participants Capitalfor the Nine Months Ended September 30, 2004
5Condensed Statements of Cash Flowsfor the Nine Months Ended September 30, 2004 and 2003
6Notes to the Condensed Financial Statements
7Item 2. Management's Discussion and Analysis of FinancialCondition and Results of Operations
14Item 3. Controls and Procedures
21PART II. OTHER INFORMATION:Item 1 - 5.
23Item 6. Exhibits and reports on Form 8-K
25

























**AFG INVESTMENT TRUST D**


**CONDENSED BALANCE SHEETS**


**(in thousands of dollars, except share amounts)**


**(unaudited)**





September 30,
2004


December 31,
2003**Assets**Cash and cash equivalents

$
1,856

$
725Accounts receivable - affiliate


9


43Loan receivable - EFG/Kettle Development LLC


516


516Investment - affiliate


-


286Interest in EFG/Kettle Development LLC


4,252


4,134Interest in EFG Kirkwood, LLC


2,065


1,868Interest in MILPI Holdings, LLC


-


7,752Interest in C & D IT, LLC


1,157


1,157Investments - other


132


79Other assets, net of accumulated amortization of $388and $331 at September 30, 2004 and December 31, 2003, respectively


352


232Equipment at cost, net of accumulated depreciationof $13,312 and $16,186 at September 30, 2004 and December
31, 2003, respectively


491


2,425Total assets

$
10,830

$
19,217**Liabilities and participants' capital**Note payable

$
3,536

$
4,452Accrued liabilities


190


270Deferred rental income


-


20Total liabilities


3,726


4,742Commitments and ContingenciesParticipants' capital (deficit):Managing Trustee


(84
)

(17
)Special beneficiary


(660
)

-Class A beneficiary interests (1,934,755 interests,initial purchase price of $25 each)


10,086


15,395Class B beneficiary interests (3,142,083 interests,initial purchase price of $5 each)


(1,415
)

-Treasury interests (154,275 Class A interests at cost)


(1,615
)

(1,615
)Accumulated other comprehensive income


792


712Total participants' capital


7,104


14,475Total liabilities and participants' capital

$
10,830

$
19,217




















**AFG INVESTMENT TRUST D**


**CONDENSED STATEMENTS OF OPERATIONS**


**(in thousands of dollars, except per share and share amounts)**


**(unaudited)**





For the Three Months Ended

For the Nine Months EndedSeptember 30,

September 30,2004

2003

2004

2003**Revenue**Lease revenue

$
360

$
1,189

$
1,122

$
3,605Interest income


13


28


26


77Gain on sale of equipment


143


220


932


327Other revenue


-


-


382


-Total revenue


516


1,437


2,462


4,009**Expenses**Depreciation and amortization


510


860


1,673


2,775Interest expense


53


422


164


1,324Impairment of assets


21


-


970


-Management fees - affiliates


63


105


190


316Operating expenses


146


130


477


414Operating expenses -affiliates


94


17


247


87Total expenses


887


1,534


3,721


4,916**Income (Loss) from Equity Interests**Equity in net income of other investments


79


-


55


-Equity in net income of EFG/Kettle Development LLC and affiliates


31


53


38


27Equity in net (loss) income of EFG Kirkwood LLC


(422
)

(382
)

197


195Equity in net income of MILPI Holdings, LLC


21


45


1,518


432Total (loss) income from equity interests


(291
)

(284
)

1,808


654Net (loss) income

$
(662
)
$
(381
)
$
549

$
(253
)Net (loss) incomeper Class A Beneficiary Interest

$
(0.21
)
$
(0.20
)
$
0.28

$
0.03per Class B Beneficiary Interest

$
(0.05
)
$
-

$
-

$
(0.08
)Average Class A Beneficiary Interests outstanding


1,934,755


1,934,755


1,934,755


1,934,755Average Class B Beneficiary Interests outstanding


3,142,083


3,142,083


3,142,083


3,142,083










The accompanying notes are an integral part of these financial statements.








**AFG INVESTMENT TRUST D**


**CONDENSED STATEMENT OF CHANGES IN PARTICIPANTS CAPITAL**


**For the Nine Months Ended September 30, 2004**


**(in thousands of dollars, except share amounts)**


**(unaudited)**








Managing Trustee

Special Beneficiary

Class A Beneficiaries

-
Class B Beneficiaries

Treasury

Accumulated Other ComprehensiveAmount

Amount

Interests

Amount

Interests

Amount

Interests

Amount

Income

TotalBalances at December 31, 2003

$
(17
)
$
-


1,934,755

$
15,395


3,142,083

$
-


154,275

$
(1,615
)
$
712

$
14,475Net income


13


-


-


536


-


-


-


-


-


549Foreign currency translation adjustment


-


-


-


-


-


-


-


-


80


80Comprehensive income





























629Distributions


(80
)

(660
)

-


(5,845
)

-


(1,415
)

-


-


-


(8,000
)Balances at September 30, 2004

$
(84
)
$
(660
)

1,934,755

$
10,086


3,142,083

$
(1,415
)

154,275

$
(1,615
)
$
792

$
7,104










The accompanying notes are an integral part of these financial statements.














**AFG INVESTMENT TRUST D**


**CONDENSED STATEMENTS OF CASH FLOWS**


**For the Nine Months Ended September 30,**


**(in thousands of dollars)**


**(unaudited)**





2004

2003**Cash flows provided by (used in) operating activities**Net income (loss)

$                                      549

$                                  (253)Adjustments to reconcile net income to net income (loss) to net cash provided by(used in) operating activities:Depreciation and amortization


1,673


2,775Gain on disposition of equipment


(932
)

(327
)Gain on investment - affiliate liquidation distribution


(382
)

-Impairment of assets


970


-Change in equity interests


(1,888
)

(230
)*Changes in assets and liabilities:*Accounts receivable - affiliate


34


(179
)Other assets


(178
)

(87
)Accrued liabilities


(79
)

(41
)Deferred rental income


(20
)

-Net cash (used in) provided by operating activities


(253
)

1,658**Cash flows provided by investing activities**Proceeds from disposition of equipment


1,250


1,025Proceeds from investment - affiliate liquidation distribution


655


-Dividend received from investment - affiliates


15


152Proceeds from sale of interest in MILPI Holdings, LLC


8,300


-Net cash provided by investing activities


10,220


1,177**Cash flows used in financing activities**Distributions paid to beneficial interest holders


(8,000
)

-Principal payments - notes payable


(916
)

(1,913
)Net cash used in provided by financing activities


(8,916
)

(1,913
)Net increase in cash and cash equivalents


1,051


922Effect of foreign exchange rate changes


80


(424
)Cash and cash equivalents at beginning of period


725


438Cash and cash equivalents at end of period

$
1,856

$
936**Supplemental information**Cash paid during the year for interest

$
166

$
1,207**Noncash transactions**Increase in interest in MILPI Holdings, LLC related to issuance of partnership interests and purchase of interest in Rancho Malibu

$
-

$
1,184Increase in interest in C & D IT, LLC related to issuance of partnership interests

$
-

$
157










The accompanying notes are an integral part of these financial statements.





AFG INVESTMENT TRUST D NOTES TO THE CONDENSED FINANCIAL STATEMENTS


(unaudited)





NOTE 1 - BASIS OF PRESENTATION





The unaudited financial statements presented herein are prepared in conformity with generally accepted accounting principles in the United States of America and the instructions for preparing Form 10-QSB under Rule 310 of Regulation S-B of the Securities and Exchange Commission (SEC). Rule 310 provides that disclosures that would substantially duplicate those contained in the most recent annual report to shareholders may be omitted from interim financial statements. The accompanying unaudited condensed financial statements have been prepared on that basis and, therefore, should be read in conjunction with the financial statements and notes presented in the 2003 Annual Report (Form 10-KSB) of AFG Investment Trust D (the Trust) on file with the United States Securities and Exchange Commission. Except as disclosed herein, there have been no material changes to the information presented in the notes to the 2003 Annual Report in Form 10-KSB.





In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly the Trusts condensed balance sheets at September 30, 2004 and December 31, 2003, condensed statements of operations for the three and nine month periods ended September 30, 2004 and 2003, condensed statements of changes in participants capital for the nine months ended September 30, 2004 and condensed statements of cash flows for the nine months ended September 30, 2004 and 2003 have been made and are reflected.





Certain amounts previously reported have been reclassified to conform to the September 30, 2004 financial statement presentation. These reclassifications did not affect total assets, total liabilities, participants capital or net income (loss).





NOTE 2 - EQUIPMENT





The following is a summary of equipment owned by the Trust at September 30, 2004 and December 31, 2003. Remaining Lease Term (Months), as used below, represents the number of months remaining from September 30, 2004 under contracted lease terms. A remaining lease term equal to zero reflects equipment either off-lease or being leased on a month-to-month basis. Equipment consists of the following at September 30, 2004 and December 31, 2003 (in thousands of dollars):





RemainingLease Term as ofSeptember 30, 2004Equipment Type

(Months)

September 30, 2004

December 31, 2003Aircraft


3

$
13,608

$
13,608Locomotives


0


-


4,272Construction and mining


0


-


306Materials handling


0


149


379Other


0


46


46Total equipment cost


-


13,803


18,611Accumulated depreciation


-


(13,312
)

(16,186
)Equipment, net of accumulated depreciation


-

$
491

$
2,425





Depreciation expense on equipment was $1.6 million and $2.8 million for the nine months ended September 30, 2004 and 2003, respectively.





At September 30, 2004, the Trusts ownership interest in aircraft and related lease payment streams are used to secure a term loan with a third-party lender. The preceding summary of equipment includes leveraged equipment having an original cost of $13.6 million and a net book value of $0.5 million at September 30, 2004.





The summary above includes fully depreciated off-lease equipment held for re-lease at September 30, 2004 with an original cost of $0.2 million.





NOTE 3 - INTEREST IN EFG/KETTLE DEVELOPMENT LLC





The Trust and AFG Investment Trust C ("Trust C") each own 50% of EFG/Kettle Development LLC (Kettle Valley), a Delaware limited liability company, which owns a non-controlling 49.9% indirect ownership interest in Kettle Valley Development Limited Partnership which owns a real estate development in Kelowna, British Columbia in Canada, called Kettle Valley.





The Trusts ownership interest in Kettle Valley and affiliates is accounted for on the equity method. The Trust recorded net income of $31,000 and $38,000 during the three and nine months ended September 30, 2004, respectively compared to net income of $0.1 million and $27,000 for the same periods in 2003. During the nine months ended September 30, 2004, the Trust recorded a net foreign currency translation adjustment of $0.1 million reflecting a strengthening of the Canadian dollar against the U.S. dollar which is included in accumulated other comprehensive income and reported as part of statements of changes in participants capital .





The table below provides Kettle Valley Development Limited Partnerships summarized consolidated statements of operations data for the three and nine months ended September 30, 2004 and 2003 (in thousands of dollars):





Three Months Ended
September 30,
2004


Three Months Ended
September 30,
2003


Nine Months Ended
September 30,
2004


Nine Months Ended
September 30,
2003Total revenues

$
1,198

$
1,258

$
4,408

$
3,747Total expenses


1,074


1,044


4,193


3,653Net income

$
124

$
214

$
215

$
94





NOTE 4 - INTEREST IN EFG KIRKWOOD LLC





The Trust, Trust C and two affiliated corporations, Equis II Corporation (Equis II) and Semele Group, Inc. (Semele), own EFG Kirkwood LLC ("EFG Kirkwood"). The Trust, Trust C and Equis II collectively own 100% of the Class A membership interests in EFG Kirkwood and Semele owns 100% of the Class B membership interests in EFG Kirkwood. The Trust holds a non-controlling interest of 30% of EFG Kirkwoods Class A membership interests.





The Trusts ownership interest in EFG Kirkwood is accounted for on the equity method.  For both the  three and nine months ended September 30, 2004 and three and nine months ended September 30, 2004, the Trust recorded a loss of $0.4 million and income of $0.2 million, respectively, which represented its pro-rata share of the net income (loss) of EFG Kirkwood.





The table below provides EFG Kirkwoods summarized consolidated statements of operations data for the three and nine months ended September 30, 2004 and 2003, respectively (in thousands of dollars):





Three Months Ended
September 30,
2004
Three Months Ended
September 30,
2003
Nine Months Ended
September 30,
2004
Nine Months
Ended
September 30,
2003Equity (loss) income on investments
$ (1,407)
$ (1,286)
$ 654
$ 638





EFG Kirkwood owns membership interests in Mountain Resort Holdings LLC (Mountain Resort) and Mountain Springs Resorts LLC (Mountain Springs). The operating companies have a fiscal year end of April 30th which is different from the Trust. The table below provides comparative summarized statements of operations data for Mountain Resort and Mountain Springs for the three and nine months ended September 30, 2004 and 2003 (in thousands dollars):





Three Months Ended
September 30, 2004

Three Months Ended
September 30, 2003

Nine Months Ended
September 30, 2004

Nine Months Ended
September 30, 2003Mountain ResortTotal revenues

$
3,176

$
3,247

$
23,284

$
24,775Total expenses


5,915


5,321


21,879


21,938Net (loss) income

$
(2,739
)
$
(2,074
)
$
1,405

$
2,837Mountain SpringsTotal revenues

$
2,114

$
2,050

$
14,310

$
12,779Total expenses


3,969


4,128


14,691


14,176Net loss

$
(1,855
)
$
(2,078
)
$
(381
)
$
(1,397
)








EFG Kirkwood guarantees the payment of obligations under a revolving line of credit between DSC/Purgatory LLC (Purgatory), a subsidiary of Mountain Springs, and a third party lender. Another shareholder in Mountain Springs also guarantees this line of credit. Either party may be called on by the lender to fulfill Purgatorys obligations. The amount of the guarantee consists of the outstanding balance of the line of credit which cannot exceed the maximum borrowing capacity under the line of $3.5 million. As of September 30, 2004, borrowings outstanding on the line of credit were $2.3 million. The line of credit expires in October 2005.





NOTE 5 **-** INTEREST IN MILPI HOLDINGS LLC ****





On August 5, 2004, the Trust sold its membership interest in MILPI pursuant to the terms of a certain Membership Interest Purchase Agreement dated as of August 5, 2004 by and among PLM MILPI Holdings LLC, as purchaser and the Trust, as seller. The sale was approved pursuant to the proxy statement and beneficial interest holders vote dated March 23, 2004. The Trusts membership interest was sold for $8.3 million in cash. PLM MILPI Holdings LLC is owned and controlled by affiliates of Gary D. Engle and James A. Coyne, who are the President and Executive Vice President, respectively, of the managing trustee of the Trust.





The impairment test under APB No. 18 The Equity Method of Accounting for Investments in Common Stock, considers whether the fair value of the equity investment has declined and whether that decline is other than temporary. Prior to the sale of MILPI, t he Trust impaired its interest in MILPI to reflect MILPI at an amount equal to the sales proceeds to be received in connection with the sale. As a result, the Trust recorded an impairment of $21,000 and $1.0 million in the three and nine months ended September 30, 2004.





The table below provides summarized consolidated statements of operations data for MILPI for the period July 1, 2004 through August 5, 2004 and the period January 1, 2004 through August 5, 2004, respectively, as well as the three and nine months ended September 30, 2003, respectively (in thousands of dollars):





.

Three Months

Nine Months.
Period July 1, 2004
Ended
Period January 1, 2004
Ended.
Through
September 30,
Through
September 30,August 5, 2004
2003
August 5, 2004
2003Total revenues
$      340
$      1,581
$      5,326
$      4,779Equity income in managed programs
26
125
785
666Total expenses
325
1,665
1,980
3,762Income before income taxes
41
41
4,131
1,683Provision for (benefit from) taxes
-
(51)
1,191
547Net income
$        41
$           92
$      2,940
$     1,136





NOTE 6 - INVESTMENT - AFFILIATE





The Trust owns 7.25 limited partnership units (the "Units") in AFG International Limited Partnership (the "Partnership"), a real estate limited partnership sponsored by Equis Financial Group Limited Partnership (EFG) that owned two commercial buildings leased to an investment grade educational institution. The Trust purchased the Units for approximately $0.7 million in a prior period. The Trust owns approximately 23% of the Partnership. The Trust accounts for its investment in the Partnership under the equity method of accounting.





The investment - affiliate is in the process of liquidating all of it assets. In April 2004, Partnership sold one of its commercial buildings to an unrelated third party. The Trust received a liquidating cash distribution of $0.7 million related to the sale. The remaining commercial building was sold in July 2004 to an unrelated third party. In addition, the Trust received regular distributions of $15,000 and $0.2 million during the nine months ended September 30, 2004 and 2003, respectively.





NOTE 7 - RELATED PARTY TRANSACTIONS





Various operating expenses incurred by the Trust are paid by Equis Financial Group Limited Partnership (EFG) on behalf of the Trust and EFG is reimbursed at its actual cost for such expenditures. Fees and other costs incurred during the three and nine months ended September 30, 2004 and 2003, which were paid or accrued by the Trust to EFG or its affiliates, are as follows (in thousands of dollars):





Three Months Ended
September 30,
2004

Three Months Ended
September 30,
2003

Nine Months Ended
September 30,
2004

Nine Months Ended
September 30,
2003Management fees

$
63

$
105

$
190

$
316Administrative charges


94


17


247


87Total

$
157

$
122

$
437

$
403





Administrative charges represent amounts owed to EFG, pursuant to Section 10.4(c) of the Trust Agreement, for persons employed by EFG who are engaged in providing administrative services to the Trust.





All rents and proceeds from the sale of equipment are paid directly to either EFG or to a lender. EFG temporarily deposits collected funds in a separate interest-bearing escrow account prior to remittance to the Trust. At September 30, 2004, the Trust was owed $1,000 by EFG for such funds and the interest thereon. These funds were remitted to the Trust in October 2004.





NOTE 8 - NOTE PAYABLE





Note payable at September 30, 2004 consists of a note with a balance of $3.5 million, which bears a fluctuating interest rate based on LIBOR plus 3.5% (5.3% at September 30, 2004). The installment note is non-recourse and is collateralized by the Trusts aircraft and assignment of the related lease payments. This note will be partially paid down by the remaining contracted lease payments. The Trust has a balloon payment obligation of $3.0 million at the maturity of the debt in January 2005.





NOTE 9 - COMPREHENSIVE INCOME (LOSS)





Statement of Financial Accounting No. 130, Reporting Comprehensive Income (SFAS 130) establishes standards for reporting and displaying comprehensive net income and its components in participants capital. SFAS 130 requires foreign currency translation adjustments to be included in comprehensive income. However, it has no impact on the Trusts net income as presented in the financial statements.





The following are the components of comprehensive income (in thousands of dollars):





Three Months Ended September 30, 2004

Three Months Ended September 30, 2003

Nine Months Ended September 30, 2004

Nine Months Ended September 30, 2003Net (loss) income

$
(662
)
$
(381
)
$
549

$
(253
)Foreign currency translation gain (loss)


234


(18
)

80


424Comprehensive (loss) income

$
(428
)
$
(399
)
$
629

$
171





NOTE 10 - CONTINGENCIES





The SEC staff has informed the Trust that it believes the Trust may be an unregistered investment company within the meaning of the The Investment Company Act of 1940 (the Act). The Trust, after consulting with counsel, does not believe that it is an unregistered investment company. However, it is possible that the Trust may have unintentionally engaged in an activity or activities that may be construed to fall within the scope of the Act. If necessary, the Trust intends to avoid being deemed an investment company by means that may include disposing assets that they might not otherwise dispose of.





The Trust is subject to various claims and proceedings in the normal course of business. Management believes that the disposition of such matters is not expected to have a material adverse effect on the financial position of the Trust or its results of operations.





NOTE 11 - SEGMENT REPORTING





The Trust operates or had operated in three principal operating segments: 1) Equipment Leasing 2) Equipment Management and 3) Real Estate Ownership, Development & Management. The Equipment Leasing segment includes acquiring and leasing equipment to third parties. The Trust is no longer allowed to purchase new equipment as its acquisition phase has ended. The Equipment Management segment included the majority of the Trust's equity interest in MILPI, which owns 100% of PLM International, Inc., a company in the equipment leasing management business, excluding its ownership in RMLP, Inc. In August 2004, the Trust sold its equity interest in MILPI to PLM MILPI Holdings LLC, a company owned by an affiliate of Gary Engle and Jim Coyne. The Real Estate segment includes the ownership, management and development of commercial properties, recreational properties, condominiums, interval ownership units, townhomes, single family homes and land sales included in the Trusts ownership interests in EFG Kirkwood, C & D IT LLC, Kettle Valley and MILPI through its subsidiary RMLP, Inc. Other includes corporate assets, which consist of cash and certain receivables. Other operating expenses consist of primarily management fees and professional services, such as audit and legal fees.





The Trusts reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers.





Segment information for the three and nine months ended September 30, 2004 and 2003 is summarized below (in thousands of dollars).





For the Three Months Ended

Equipment

Equipment

RealSeptember 30, 2004


Leasing


Management


Estate


Other


Total**Revenue:**Lease revenue

$
360

$
-

$
-

$
-

$
360Interest income


-


-


5


8


13Gain on sale of equipment


143


-


-


-


143Total revenue


503


-


5


8


516**Expenses:**Depreciation and amortization


510


-


-


-


510Interest expense


53


-


-


-


53Impairment of assets


-


21


-


-


21Management fees - affiliates


18


25


20


-


63Operating expenses


58


-


-


88


146Operating expenses - affiliates


94


-


-


-


94Total expenses


733


46


20


88


887**Equity Interests:**Equity in net income of other investments


-


-


79


-


79Equity in net income of EFG/Kettle Development LLC


-


-


31


-


31Equity in net loss of EFG Kirkwood LLC


-


-


(422
)

-


(422
)Equity in net income of MILPI Holdings, LLC


-


21


-


-


21Total income (loss) from equity interests


-


21


(312
)

-


(291
)Net loss

$
(230
)
$
(25
)
$
(327
)
$
(80
)
$
(662
)For the Three Months Ended


Equipment


Equipment


RealSeptember 30, 2003


Leasing


Management


Estate


Other


Total**Revenue:**Lease revenue

$
1,189

$
-

$
-

$
-

$
1,189Interest income


-


-


26


2


28Gain on sale of equipment


220


-


-


-


220Total revenue


1,409


-


26


2


1,437**Expenses:**Depreciation and amortization


860


-


-


-


860Interest expense


422


-


-


-


422Management fees - affiliates


60


25


20


-


105Operating expenses


30


-


-


100


130Operating expenses - affiliates


17


-


-


-


17Total expenses


1,389


25


20


100


1,534**Equity Interests:**Equity in net income of EFG/Kettle Development LLC


-


-


53


-


53Equity in net loss of EFG Kirkwood LLC


-


-


(382
)

-


(382
)Equity in net income of MILPI Holdings, LLC


-


45


-


-


45Total income (loss) from equity interests


-


45


(329
)

-


(284
)Net income (loss)

$
20

$
20

$
(323
)
$
(98
)
$
(381
)For the Nine Months Ended


Equipment


Equipment


RealSeptember 30, 2004


Leasing


Management


Estate


Other


Total**Revenue:**Lease revenue

$
1,122

$
-

$
-

$
-

$
1,122Interest income


-


-


15


11


26Gain on sale of equipment


932


-


-


-


932Other revenue


-


-


382


-


382Total revenue


2,054


-


397


11


2,462**Expenses:**Depreciation and amortization


1,673


-


-


-


1,673Interest expense


164


-


-


-


164Impairment of assets


-


970


-


-


970Management fees - affiliates


55


73


61


1


190Operating expenses


110


-


-


367


477Operating expenses - affiliates


247


-


-


-


247Total expenses


2,249


1,043


61


368


3,721**Equity Interests:**Equity in net income of other investments


-


-


55


-


55Equity in net income of EFG/Kettle Development LLC


-


-


38


-


38Equity in net income of EFG Kirkwood LLC


-


-


197


-


197Equity in net income of MILPI Holdings, LLC


-


1,515


3


-


1,518Total income from equity interests


-


1,515


293


-


1,808Net (loss) income

$
(195
)
$
472

$
629

$
(357
)
$
549Total assets at September 30, 2004

$
671

$
-

$
8,275

$
1,884

$
10,830For the Nine Months Ended


Equipment


Equipment


RealSeptember 30, 2003


Leasing


Management


Estate


Other


Total**Revenue**Lease revenue

$
3,605

$
-

$
-

$
-

$
3,605Interest income


-


-


73


4


77Gain on sale of equipment


327


-


-


-


327Total revenue


3,932


-


73


4


4,009**Expenses**Depreciation and amortization


2,775


-


-


-


2,775Interest expense


1,324


-


-


-


1,324Management fees - affiliates


181


73


61


1


316Operating expenses


48


-


-


366


414Operating expenses - affiliates


87


-


-


-


87Total expenses


4,415


73


61


367


4,916**Equity Interests**Equity in net income of EFG/Kettle Development LLC


-


-


27


-


27Equity in net income of EFG Kirkwood LLC


-


-


195


-


195Equity in net income of MILPI Holdings, LLC


-


432


-


-


432Total income from equity interests


-


432


222


-


654Net (loss) income

$
(483
)
$
359

$
234

$
(363
)
$
(253
)





NOTE 12- PARTICIPANTS CAPITAL





In September 2004, the Managing Trustee declared and paid an $8.0 million distribution to its beneficial interest holders. The distribution was funded from the Trusts sale of its membership MILPI in August 2004.





NOTE 13RECENT ACCOUNTING PRONOUNCEMENTS





In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires the Trust to evaluate all existing arrangements to identify situations where the Trust has a variable interest, commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a variable interest entity, commonly a thinly capitalized entity, and further determine when such variable interest requires the Trust to consolidate the variable interest entities financial statements with its own. The Trust is required to perform this assessment by December 31, 2004 and consolidate any variable interest entities for which the Trust will absorb a majority of the entities expected losses or receive a majority of the expected residual gains.





The Trust is still in the process of evaluating its impact and has not completed its analysis or concluded on the impact that FIN 46 will have on the Trust.





NOTE 14 - SUBSEQUENT EVENT





On November 7, 2004 a fire broke out at the Mountain Resorts Holdings power generation subsidiary, Mountain Utilities. The fire did extensive damage to the facility resulting in power outage to its entire service area. Mountain Utilities was able to restore power using temporary power supplies and the ski resort closing was limited to four days. No injuries were sustained. The resort is currently in the process of thoroughly assessing the damage and estimating the time for repair. Management has met with the resorts insurance adjusters to ensure the appropriate actions have been taken to restore business. Mountain Resort Holdings, LLC has a $10.0 million property damage policy with a $25,000 deductible and a $4.0 million business interruption policy with a $25,000 deductible. Management cannot determine the long term financial impact of the event at this time.




























**AFG INVESTMENT TRUST D**





**FORM 10-QSB**





**PART I. FINANCIAL INFORMATION**











Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.





Forward-looking Information





Certain statements in this quarterly report of AFG Investment Trust D (the Trust) that are not historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the collection of the Trusts contracted rents, the realization of residual proceeds for the Trusts equipment, the performance of the Trusts non-equipment assets, and future economic conditions.





Contingencies and Litigation





The Securities and Exchange Commission staff has informed the Trust that it believes the Trust may be an unregistered investment company within the meaning of The Investment Company Act of 1940 (the Act). The Trust, after consulting with counsel, does not believe that it is an unregistered investment company. However, it is possible that the Trust may have unintentionally engaged in an activity or activities that may be construed to fall within the scope of the Act. If necessary, the Trust intends to avoid being deemed an investment company by means that may include disposing assets that they might not otherwise dispose of.





The Trust is subject to various claims and proceedings in the normal course of business. Management believes that the disposition of such matters is not expected to have a material adverse effect on the financial position of the Trust or its results of operations.





Critical Accounting Policies and Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires AFG ASIT Corporation (the Managing Trustee) to make estimates and assumptions that affect the amounts reported in the financial statements. On a regular basis, the Managing Trustee reviews these estimates and assumptions including those related to revenue recognition, asset lives and depreciation, impairment of long-lived assets and contingencies. These estimates are based on the Managing Trustees historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Managing Trustee believes, however, that the estimates, including those for the above-listed items, are reasonable.





The Managing Trustee believes the following critical accounting policies, among others, are subject to significant judgments and estimates used in the preparation of these financial statements:





Revenue Recognition: Rents are payable to the Trust monthly or quarterly and no significant amounts are calculated on factors other than the passage of time. The Trusts leases are accounted for as operating leases and are noncancellable. Rents received prior to their due dates are deferred.





Asset lives and depreciation method: The Trusts primary business involved the purchase and subsequent lease of long-lived equipment. The Trust's depreciation policy is intended to allocate the cost of equipment over the period during which it produces economic benefit. The principal period of economic benefit is considered to correspond to each asset's primary lease term, which generally represents the period of greatest revenue potential for each asset. Accordingly, to the extent that an asset is held on primary lease term, the Trust depreciates the difference between (i) the cost of the asset and (ii) the estimated residual value of the asset on a straight-line basis over such term. For purposes of this policy, estimated residual values represent estimates of equipment values at the date of the primary lease expiration. To the extent that an asset is held beyond its primary lease term, the Trust continues to depreciate the remaining net book value of the asset on a straight-line basis over the asset's remaining economic life.





Impairment of long-lived assets: The Trust evaluates long-lived assets for impairment whenever events or circumstances indicate that the carrying bases of such assets may not be recoverable. Whenever circumstances indicate that an impairment may exist, the company evaluates future cash flows of the asset to the carrying value. If projected undiscounted future cash flows are lower than the carrying value of the asset, a loss is recorded. The loss recorded is equal to the difference between the carrying amount and the fair value of the asset. The fair value of the asset is determined based on a valuation model, which includes expected discounted future cash flows of the asset, current market prices and managements market knowledge.





The Managing Trustee evaluates the net realizable value of significant equipment assets, such as aircraft, individually. All other assets are evaluated collectively by equipment type unless the Managing Trustee learns of specific circumstances, such as a lessee default, technological obsolescence, or other market developments, which could affect the net realizable value of particular assets. Adjustments to reduce the net carrying value of equipment are reflected separately on the accompanying Statements of Income as impairment of equipment.





Results of Operations





Segment Reporting





The Trust operates or had operated in three principal operating segments: 1) Equipment Leasing 2) Equipment Management and 3) Real Estate Ownership, Development & Management. The Equipment Leasing segment includes acquiring and leasing equipment to third parties. The Trust is no longer allowed to purchase new equipment as its acquisition phase has ended. The Equipment Management segment includes the majority of the Trust's equity interest in MILPI, which owns 100% of PLM International, Inc., a company in the equipment leasing management business, excluding its ownership in RMLP, Inc. In August 2004, the Trust sold its equity interest in MILPI to PLM MILPI Holdings LLC, a company owned by an affiliate of Gary Engle and Jim Coyne. The Real Estate segment includes the ownership, management and development of commercial properties, recreational properties, condominiums, interval ownership units, townhomes, single family homes and land sales included in the Trusts ownership interests in EFG Kirkwood, C & D IT LLC, Kettle Valley and MILPI through its subsidiary RMLP, Inc. Other includes corporate assets, which consist of cash and certain receivables. Other operating expenses consist primarily management fees and professional services such as audit and legal fees.





The Trusts reportable segments offer different products or services and are managed separately because each requires different operating strategies and management expertise. There are no material intersegment sales or transfers.





**Equipment Leasing**





For the three and nine months ended September 30, 2004, the Trust recognized lease revenue of $0.4 million and $1.1 million, respectively, compared to $1.2 million and $3.6 million, respectively, for same periods in 2003. The decrease in lease revenue in the three and nine months ended September 30, 2004 compared to the same periods in 2003 resulted primarily from decrease in lease revenue as a result of the disposition of equipment. The lease for the Trusts remaining asset on lease, an aircraft, expires in January 2005.





During the three and nine months ended September 30, 2004, the Trust sold equipment having a net book value of $0.3 million to unaffiliated third parties. These sales resulted in a gain of $0.1 million and $0.9 million, respectively, for the three and nine month periods ended September 30, 2004. During the three and nine months ended September 30, 2003, the Trust sold equipment having a net book value of $0.3 million to unaffiliated third parties. These sales resulted in a gain of $0.2 million and $0.3 million, respectively.





Depreciation expense was $0.5 million and $1.7 million for the three and nine months ended September 30, 2004, respectively compared to $0.9 million and $2.8 million, respectively, for the same periods in 2003. Depreciation and amortization decreased by $0.4 million and $1.1 million during the three and nine months ended September 30, 2004 compared to the same period in 2003. The decrease in depreciation for the respective periods is attributable to the disposition of the Trusts equipment portfolio. Depreciation and amortization is expected to continue to decline in the future as the Trusts equipment portfolio is sold and not replaced.





Interest expense on third party debt was $0.1 million and $0.2 million for the three and nine months ended September 30, 2004, respectively, compared to $0.4 million and $1.3 million, respectively, for the same periods in 2003. The decrease in interest expense for each of the respective periods is attributable to lower average outstanding debt balances in the periods ended September 30, 2004 compared to the same periods in 2003. Interest expense in the equipment leasing segment is expected to decline in the future.





Management fees-affiliate from equipment leasing were $18,000 and $0.1 million for the three and nine months ended September 30, 2004, respectively, compared to $0.1 million and $0.2 million, respectively, for the same periods in 2003. Management fees are based on 5% of gross lease revenue generated by operating leases and 2% of gross lease revenue generated by full payout leases, subject to certain limitations. The decrease in management fees- affiliates for the respective periods is attributable to the disposition of the Trusts leasing equipment.





Operating expenses and operating expenses - affiliates were $0.2 million and $0.4 million for the three and nine months ended September 30, 2004, respectively, compared to $47,000 and $0.1 million, respectively, for the same periods in 2003. The increase in operating expenses is attributable to an increase in selling and remarketing costs related to the disposition of the Trusts assets. Operating expenses consist primarily of administrative charges as well as printing and remarketing expenses. The amount of future operating expenses cannot be predicted with certainty; however, such expenses are usually higher during the acquisition and liquidation phases of a trust. Other fluctuations typically occur in relation to the volume and timing of remarketing activities.





**Equipment Management**





During the period from July 1, 2004 through August 5, 2004 and period January 1, 2004 through August 5, 2004 the Trust recorded income from equity investments in the equipment management segment of $21,000 and $1.5 million, respectively, compared to $45,000 and $0.4 million, respectively, for the three and nine months ended September 30, 2003, which represented its pro-rata share of the net income of MILPI accounted for under the equity method of accounting.





On August 5, 2004, the Trust sold its membership interest in MILPI pursuant to the terms of a certain Membership Interest Purchase Agreement dated as of August 5, 2004 by and among PLM MILPI Holdings LLC, as purchaser and the Trust, as seller. The sale was approved pursuant to the proxy statement and shareholder vote dated March 23, 2004. The Trusts membership interest was sold for $8.3 million in cash. PLM MILPI Holdings LLC is owned and controlled by an affiliate of Gary D. Engle and James A. Coyne, who are the President and Executive Vice President, respectively, of the managing trustee of the Trust.





During the period from July 1, 2004 through August 5, 2004 and period January 1, 2004 through August 5, 2004, MILPI recognized revenues of $0.3 million and $5.3 million, respectively, compared to $1.6 million and $4.8 million, respectively, for the previous periods in 2003. Revenues for the period from July 1, 2004 through August 5, 2004 and period January 1, 2004 through August 5, 2004 consisted primarily of management fees of $0.2 million. Revenues for the period January 1, 2004 through August 5, 2004 consisted primarily of management fees of $2.2 million, $1.3 million of acquisition and lease negotiation fees, $1.2 million gain on disposition of equipment and $0.3 million of lease revenue. Revenues for the three months ended September 30, 2003 are comprised primarily of management fees of $0.9 million, $0.2 million of acquisition and lease negotiation fees and $0.4 million of operating lease revenue. For the nine months ended September 30, 2003, revenues were comprised of management fees of $3.2 million, $0.7 million of acquisition and lease negotiation fees, $0.2 million gain on disposition of equipment and $0.5 million of lease revenue..





During the period from July 1, 2004 through August 5, 2004 and period January 1, 2004 through August 5, 2004, MILPI incurred total expenses of $0.3 million and $2.0 million, respectively, compared to $1.6 million and $3.8 million, respectively, for the previous period in 2003. Expenses for the period from July 1, 2004 through August 5, 2004 are comprised of operational support expenses of $0.1 million and depreciation and amortization expense of $0.1 million. For the period January 1, 2004 through August 5, 2004, expenses are comprised primarily of operational support expenses of $1.5 million and depreciation and amortization expense of $0.5 million. Expenses for the three months ended September 30, 2003 are comprised of operational support expenses of $0.9 million, depreciation and amortization expense of $0.5 million and a $0.2 million impairment of MILPIs investments in the managed programs. For the nine months ended September 30, 2003, expenses are comprised primarily of operational support expenses of $2.7 million, depreciation and amortization expense of $0.8 million and $0.4 million impairment of MILPIs investments in the managed programs.





During the period January 1, 2004 through August 5, 2004, MILPI incurred income tax expense of $1.2 million, respectively, with an effective tax rate of 29% for the period. For the nine month period ended September 30, 2003, MILPI incurred an income tax expense of $0.5 million, respectively, with an effective tax rate of 33% for the nine month period. The effective tax rate decreased 4% during the nine month period ended September 30, 2004 compared to the previous period in 2003 due to an increased amount of income being earned at MILPI Holdings, LLC, which is a non-taxable entity.





**Real Estate**





Interest income in the real estate segment for the three and nine months ended September 30, 2004 was $5,000 and $15,000 compared to $26,000 and $0.1 million for the same periods in 2003. Interest income is generated from loans made to affiliates. Interest income decreased in the three and nine months ended September 30, 2004 compared to the same period in 2003 due to the Trust renegotiating the terms of its loan to Kettle Valley.





Management fees paid to EFG for non-equipment assets were $20,000 and $0.1 million for each of the three and nine months ended September 30, 2004 and 2003, respectively. Management fees for non-equipment assets, excluding cash, are 1% of the original equipment cost of such assets under management.





Kettle Valley





Kettle Valley is a real estate development company located in Kelowna, British Columbia, Canada. The project, which is being developed by Kettle Valley Development Limited Partnership, consists of approximately 280 acres of land that is zoned for 1,120 residential units in addition to commercial space. To date, 265 residential units have been constructed and sold and 13 additional units are under construction.





The Trust indirectly has an approximate 25% ownership interest in Kettle Valley. For the three and nine months ended September 30, 2004, the Trust recorded income of $31,000 and $38,000, respectively, compared to income of $0.1 million and $27,000 for the same periods in 2003. During the nine months ended September 30, 2004, the Trust recorded a foreign currency translation gain of $0.1 million, included in accumulated other comprehensive income and reported as part of statements of changes in participants capital, reflecting a strengthening of the Canadian dollar against the U.S. dollar at the end of the third quarter of 2004.





During the three and nine months ended September 30, 2004, Kettle Valley recorded revenues of $1.2 million and $4.4 million, respectively, compared to revenues of $1.3 million and $3.7 million for the same periods in 2003. Total expenses incurred during the three and nine months ended September 30, 2004 were $1.1 million and $4.2 million, respectively, compared to $1.0 million and $3.7 million in the same periods in 2003. The increase in revenues and total expenses during the nine months ended September 30, 2004 compared to the same period in 2003 is the result of an increase in the number of lot and home sales.





EFG Kirkwood





The Trust owns 30% of the Class A membership interests of EFG Kirkwood, a joint venture between the Trust, Trust C and two affiliated companies, Equis II and Semele Group, Inc. (Semele). AFG ASIT Corporation, the Managing Trustee of the Trust and a subsidiary of Semele, also is the manager of EFG Kirkwood. EFG Kirkwoods assets consist of two minority interest investments accounted for under the equity method of accounting. The investments consist of an interest in two ski resorts: Mountain Resort Holdings LLC (Mountain Resort) and Mountain Springs Resorts LLC (Mountain Springs).





Mountain Resort, through four wholly owned subsidiaries, owns and operates the Kirkwood Mountain Resort, a ski resort located in northern California, a public utility that services the local community, and land that is held for residential and commercial development. Mountain Springs, through a wholly owned subsidiary, owns a controlling interest in DSC/Purgatory LLC ("Purgatory") in Durango, Colorado.





For both the  three and nine months ended September 30, 2004 and three and nine months ended September 30, 2003, the Trust recorded a loss of $0.4 million and income of $0.2 million from its ownership interest in EFG Kirkwood. This income (loss) represents the Trusts share of the net income (loss) of EFG Kirkwood recorded under the equity method of accounting. See below for discussion of the operating results of the resorts.





Mountain Resort Operating Results





During the three and nine months ended September 30, 2004, Mountain Resort recorded total revenues of approximately $3.2 million and $23.3 million compared to $3.2 million and $24.8 million for the same periods in 2003. The decrease in total revenues from 2003 to 2004 is the result of a decrease in ski related revenue. The decrease in ski-related revenues resulted from a decrease in visitors to the resort compared to the same period last year, as a result of unfavorable weather conditions during the winter season.





During the three and nine months ended September 30, 2004, Mountain Resort recorded total expenses of $5.9 million and $21.9 million, compared to $5.3 million and $21.9 million for the same periods in 2003, respectively. The increase in expenses during the three months ended September 30, 2004 is primarily due to an increase in operational support costs during the period.





On November 7, 2004 a fire broke out at the Mountain Resorts Holdings power generation subsidiary, Mountain Utilities. The fire did extensive damage to the facility resulting in power outage to its entire service area. Mountain Utilities was able to restore power using temporary power supplies and the ski resort closing was limited to four days. No injuries were sustained. The resort is currently in the process of thoroughly assessing the damage and estimating the time for repair. Management has met with the resorts insurance adjusters to ensure the appropriate actions have been taken to restore business. Mountain Resort Holdings, LLC has a $10.0 million property damage policy with a $25,000 deductible and a $4.0 million business interruption policy with a $25,000 deductible. Management cannot determine the long term financial impact of the event at this time.


Mountain Springs Operating Results





During the three and nine months ended September 30, 2004, Mountain Springs recorded total revenues of $2.1 million and $14.3 million, compared to $2.1 million and $12.8 million for the same periods of 2003. The increase in total revenues from 2003 to 2004 is the result of an increase in visitors to the resort compared to the same periods of 2003, as a result of improved weather conditions during the winter season.





Total expenses were $4.0 million and $14.7 million for the three and nine months ended September 30, 2004 compared to $4.1 million and $14.2 million for the same period in 2003. The increase in total expenses for the three and nine months ended September 30, 2004 compared to the same periods in 2003 is a result of an increased cost of sales corresponding to the increase in revenues.





Liquidity and Capital Resources and Discussion of Cash Flows





The Trust by its nature is a limited life entity. The Trust has a scheduled termination date of December 31, 2006. In the first quarter of 2004, the beneficial interest holders approved a resolution, which among other things, allow the Trust to adopt a plan of liquidation and dissolution prior to 2006. The Managing Trustee anticipates that this will be adopted in the fourth quarter of 2004.





The Trust sold its membership interest in MILPI in August 2004 for $8.3 million in cash proceeds. Subsequent to the sale of MILPI, the Managing Trustee declared and paid an $8.0 million cash distribution to the beneficial interest holders of the Trust. The Trust could have other significant asset sales in 2004.





The Trust's principal operating activities derive from asset rental transactions. These cash inflows are used to satisfy debt service obligations associated with the assets, and to pay management fees and operating costs. Operating activities used cash of $0.3 million during the nine months ended September 30, 2004.





Accounts receivable-affiliate decreased by $34,000 or 79% during the nine months ended September 30, 2004. Receivable from affiliates consists of rent or proceeds from the sale of equipment by Equis Financial Group Limited Partnership (EFG), an affiliated entity. All rents and proceeds from the sale of equipment are paid directly to either EFG or to a lender. EFG temporarily deposits collected funds in a separate interest-bearing escrow account and remits to the Trust on a monthly basis. At September 30, 2004, the Trust was owed $1,000 by EFG for such funds compared to $43,000 at December 31, 2003. The Trust was paid in full by EFG in October 2004.





The Trusts interest in affiliate decreased by $0.3 million or 100% during the nine month period ended September 30, 2004. In April 2004, the Trusts investment - affiliate sold one of its commercial buildings to an unrelated third party. The Trust received a cash distribution of $0.7 million related to the sale. In July 2004, the Trust sold the remaining building to an unrelated third party. In addition, the Trust received distributions of $15,000 during the nine months ended September 30, 2004. The Managing Trustee expects an additional liquidating distribution as a result of the remaining sale of the commercial building in the fourth quarter of 2004.





The Trusts investment in Kettle Valley increased by $0.1 million during the first nine months of 2004 or 3%. The increase is due to the Trust recording a net foreign currency translation adjustment of $0.1 million reflecting a strengthening of the Canadian dollar  against the U.S. dollar.





Investment in EFG Kirkwood increased by $0.2 million or 11% during the nine month period ended September 30, 2004. The increase is attributable to equity income of $0.2 million being recorded during 2004 from this equity investment.





The Trusts interest in MILPI decreased by $7.8 million or 100% during the nine month period ended September 30, 2004. On August 5, 2004, the Trust sold its membership interest in MILPI pursuant to the terms of a certain Membership Interest Purchase Agreement dated as of August 5, 2004 by and among PLM MILPI Holdings LLC, as purchaser and the Trust, as seller. The sale was approved pursuant to the proxy statement and shareholder vote dated March 23, 2004. The Trusts membership interest was purchased for $8.3 million in cash. PLM MILPI Holdings LLC is a Delaware limited liability company owned and controlled by an affiliate of Gary D. Engle and James A. Coyne, who are the President and Executive Vice President, respectively, of the managing trustee of the Trust.





Equipment held for lease decreased by $1.9 million or 80% during 2004. The decrease is primarily attributable to depreciation expense recorded during the period. In addition, the Trust sold equipment with a net book value of $0.3 million to unaffiliated third parties.





The Trusts balance in note payable decreased by $0.9 million or 21% during the nine month period ended September 30, 2004. The decrease in attributable to principal payments made during the period.





Accrued liabilities decreased by $0.1 million or 30% during the period ended September 30, 2004. The decrease in accrued liabilities is due to accrued expenses related to selling and remarketing costs accrued at December 31, 2003 related to the disposition of the Trusts off-lease locomotives. A similar liability was not owed at September 30, 2004.





At September 30, 2004, the Trust was due aggregate future minimum lease payments of $0.4 million from contractual lease agreements, a portion of which will be used to pay down the principal balance of note payable of $3.5 million. Additional cash inflows may be realized from future remarketing activities, such as lease renewals and equipment sales, the timing and extent of which cannot be predicted with certainty. This is because the timing and extent of equipment sales is often dependent upon the needs and interests of the existing lessees. Some lessees may choose to renew their lease contracts, while others may elect to return the equipment. In the latter instances, the equipment could be re-leased to another lessee or sold to a third party.





During the nine months ended September 30, 2004, the Trust sold equipment with a net book value of $0.3 million to existing lessees and third parties. These sales resulted in a gain on sale of $0.9 million. Future inflows of cash from equipment disposals will vary in timing and amount and will be influenced by many factors including, but not limited to, the frequency and timing of lease expirations, the type of equipment being sold, its condition and age, and future market conditions.





**Equity** **Interest Investments**





The Trust owns equity interest investments in equipment management and several real estate companies, which are accounted for under the equity method of accounting. The financial position and liquidity of these companies have a material impact on the Trust. A description of the Trusts minority interest investments and a brief summary of the financial position are summarized below:





The Trust has minority interest investments in the following entities as of September 30, 2004 (in thousands of dollars):





September 30,
2004Interest in EFG/Kettle Development LLC

$                                    4,252Interest in EFG Kirkwood, LLC

2,065Interest in C & D IT, LLC

1,157Investment - other

132Total

$
7,606





Kettle Valley





Kettle Valley is a real estate development company located in Kelowna, British Columbia, Canada. Kettle Valley has historically operated at a net loss and has sustained negative cash flows from operations. As of September 30, 2004, the company has approximately $17.1 million in current assets, including $15.9 million of land under development. At September 30, 2004, Kettle Valley has $4.9 million in short term debt, of which $2.4 million represents related party debt. The real estate is in the early phase of development and may incur losses and negative cash flow in the future. Kettle Valley expects to pay existing obligations with the sales proceeds from future lot sales. As of September 30, 2004, 265 lots have been sold and 13 homes are currently under construction. Kettle Valley did not pay dividends in the first nine months of 2004 or in 2003 and does not anticipate paying dividends in the near future until lots sales and cash flow from home construction and sales are sufficient to support operations. Future capital needs that may be required by Kettle Valley are expected to be financed by the other equity holders or outside investors.





EFG Kirkwood





EFG Kirkwood was formed for the purpose of acquiring a minority interest in two real estate investments. The investments consist of an interest in two ski resorts: Mountain Resort and Mountain Springs. EFG Kirkwood has no other significant assets other than its interest in the ski resorts.





**Mountain Springs:** Mountain Springs, through a wholly owned subsidiary, owns a controlling interest in Purgatory in Durango, Colorado. Purgatory is a ski and mountain recreation resort covering 2,500 acres, situated on 40 miles of terrain with 75 ski trails. Mountain Spring's primary cash flows come from its ski operations during the ski season, which is heavily dependent on snowfall. Additional cash flow is provided by its real estate development activities and by the resorts summer recreational programs. When out of season, operations are funded by available cash and through the use of a $3.5 million dollar line of credit, which is guaranteed by EFG Kirkwood as well as another investor in Mountain Springs. The line of credit was renewed in October 2004 for an additional year.





At September 30, 2004, Mountain Springs had current assets of $3.8 million, which consisted of cash of $1.5 million, accounts receivable of $1.5 million and inventories and other assets totaling $0.8 million. Long-term assets consist primarily of buildings, equipment and real estate totaling approximately $20.4 million.





Liabilities totaled approximately $24.2 million at September 30, 2004 and consisted primarily of debt and notes outstanding.





Mountain Springs also owns 51% of Durango Mountain Land Company, which owns 500 acres of real estate under development, which will develop, and otherwise operate this real estate.





Mountain Springs did not pay dividends in the first nine months of 2004 or in 2003 and does not anticipate paying dividends in the near future until cash flow from operations and residential sales are sufficient to support operations.





**Mountain Resort:** Mountain Resort is primarily a ski and mountain recreation resort with more than 2,000 acres of terrain, located approximately 32 miles south of Lake Tahoe. The resort receives approximately 70% of its revenues from winter ski operations, primarily ski, lodging, retail and food and beverage services with the remainder of the revenues generated from summer outdoor activities, including mountain biking, hiking and other activities. Mountain Resorts primary cash flows come from its ski operations during the ski season, which is heavily dependent on snowfall. Excess cash flows will be used to finance development on the real estate surrounding the resort.





At September 30, 2004, Mountain Resort had current assets of approximately $8.9 million, which consisted of cash of $5.5 million, accounts receivable of $2.5 million, and inventory and other assets of $0.9 million. Long-term assets consisted primarily of buildings, equipment and real estate totaling $37.1 million.





Liabilities were approximately $25.8 million, which consisted primarily of long-term senior notes and affiliated debt.





Both Mountain Springs and Mountain Resort are subject to a number of risks, including weather-related risks and the risks associated with real estate development and resort ownership. The ski resort business is seasonal in nature and insufficient snow during the winter season can adversely affect the profitability of a given resort. Many operators of ski resorts have greater resources and experience in the industry than the Trust, its affiliates and its joint venture partners.





On November 7, 2004 a fire broke out at the Mountain Resorts Holdings power generation subsidiary, Mountain Utilities. The fire did extensive damage to the facility resulting in power outage to its entire service area. Mountain Utilities was able to restore power using temporary power supplies and the ski resort closing was limited to four days. No injuries were sustained. The resort is currently in the process of thoroughly assessing the damage and estimating the time for repair. Management has met with the resorts insurance adjusters to ensure the appropriate actions have been taken to restore business. Mountain Resort Holdings, LLC has a $10.0 million property damage policy with a $25,000 deductible and a $4.0 million business interruption policy with a $25,000 deductible. Management cannot determine the long term financial impact of the event at this time.





Mountain Resorts did not pay dividends in the first nine months of 2004 or in 2003 and does not anticipate paying dividends in the near future until cash flow from operations and residential sales are sufficient to support operations.





C&D IT LLC





The Trust and Trust C each own 50% of C & D IT LLC, a Delaware limited liability company, to which each Trust contributed $1.0 million, for a 25% interest in the Rancho Malibu Limited Partnership. The Trusts ownership interest in C & D IT LLC is accounted for on the equity method. C & D IT LLC did not pay or declare any dividends in 2004 and none are expected for the foreseeable future.





**Outlook for the Future**





Several other factors may affect the Trusts operating performance during the remainder of 2004 and beyond including:





-asset sales


-changes in the real estate markets in which the Trust has ownership interest.





The future out look for the different operating segments of the Trust is as follows:





Asset Sales





The Trust has a scheduled termination date of December 31, 2006. In the first quarter of 2004, the beneficial interest holders approved a resolution, which among other things, allow the Trust to adopt a plan of liquidation and dissolution prior to 2006. The Managing Trustee anticipates that this will be adopted in 2004.





In August 2004, the Trust sold its membership interest in MILPI to a related party for $8.3 million in sales proceeds. In April 2004, the Partnership sold one of its commercial buildings to an unrelated third party. The Trust received a liquidation cash distribution of $0.7 million related to the sale. The other commercial building was sold in July 2004 to an unrelated third party. The Trust could have other significant asset sales in 2004.





Real Estate





The Trust has a minority interest in two ski resorts, which are subject to the risks of the tourism industry. The resorts are subject to a number of risks, including weather-related risks. The ski resort business is seasonal in nature and insufficient snow during the winter season can adversely affect the profitability of a given resort. Many operators of ski resorts have greater resources and experience in the industry than the Trust, its affiliates and its joint venture partners.





The Trust also has a minority interest in several real estate development companies, some of which are located at the resorts. The risks generally associated with real estate include, without limitation, the existence of senior financing or other liens on the properties, general or local economic conditions, property values, the sale of properties, interest rates, real estate taxes, other operating expenses, the supply and demand for properties involved, zoning and environmental laws and regulations, and other governmental rules.





The Trust s investment in real estate development companies have experienced an increase in residential sales as a result of interest rates being at historical lows. There is a risk that residential sales could materially decline if interest rates increase.





The Trust's involvement in real estate development also introduces financials risk, including the potential need to borrow funds to develop the real estate projects. While the Trust's management presently does not foresee any unusual risks in this regard, it is possible that factors beyond the control of the Trust, its affiliates and joint venture partners, such as a tightening credit environment, could limit or reduce its ability to secure adequate credit facilities at a time when they might be needed in the future. Alternatively, the Trust could establish joint ventures with other parties to share participation in its development projects.





Because the investments in the ski resorts include real estate development companies, the risks and uncertainties associated with the tourism industry can adversely affect the value of the real estate development companies associated with these investments. Decrease in tourism, weather-related conditions or other risks discussed above can permanently decrease the value of the investment and future operations.





The Trust does not anticipate receiving dividend distributions from the real estate investments in the near future due to the uncertainty of the current market conditions.





As the Managing Trustee anticipates significant asset sales in 2004, some or all of the Trusts assets may be marketed for sale in 2004.





Equipment Leasing





The Trusts remaining equipment leasing assets consist primarily of an aircraft. The aircraft which is financed with non recourse debt, is on lease until January 2005, at which time the balance of the debt financing the aircraft is due. The Managing Trustee anticipates this plane will be released and the associated debt extended, which may increase the sales value of the aircraft.




In accordance with the Trust Agreement, upon the dissolution of the Trust, the Managing Trustee will be required to contribute to the Trust an amount equal to any negative tax balance, which may exist in the Managing Trustee's capital account, as computed for tax purposes. At September 30, 2004, the Managing Trustee did not have a negative tax capital account balance. No such requirement exists with respect to the Special Beneficiary.




Item 3. Controls and Procedures





*Limitations on the Effectiveness of Controls*





The Trustees management, including its President and Chief Financial Officer (CFO), does not expect that our internal controls or disclosure controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.





Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud, if any, within the Trust have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.





Notwithstanding the forgoing limitations, we believe that our internal controls and disclosure controls provide reasonable assurance that the objectives of our controls system are met.





*Quarterly Evaluation of the Trusts Disclosure Controls and Internal Controls*





(1)  As of the end of the period covered by this report, the Trustee carried out an evaluation, under the supervision and with the participation of the Trustees management, including its Chief Executive Officer and CFO, of the effectiveness of the design and operation of the Trusts disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, the Chief Executive Officer and CFO concluded that the Trusts disclosure controls and procedures are effective in timely alerting them to material information relating to the Trusts required to be included in the Trusts exchange act filings.





(2)             There have been no significant changes in the Trusts internal controls or in other factors which could significantly affect internal controls subsequent to the date of the Trustee carried out its evaluations






















**AFG INVESTMENT TRUST D**


**FORM 10-QSB**


**PART II. OTHER INFORMATION**





Item 1.  Legal Proceedings


Response: None





Item 2.  Changes in Securities


Response: None





Item 3.  Defaults upon Senior Securities


Response: None





Item 4.  Submission of Matters to a Vote of Security Holders


Response: None





Item 5.  Other Information


Response: None





Item 6.  Exhibits and reports on Form 8-K





a).  Exhibits





31.1
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





b).  Reports on Form 8-K





The Company filed a Form 8-K with the SEC on August 5, 2004 reporting under Item 2 ( Acquisition or Disposition of Assets ), that the Trust has sold its interests in MILPI Holdings, LLC to PLM MILPI Holdings LLC, a Delaware limited liability company owned and controlled by an affiliate of Gary D. Engle and James A. Coyne, who are the President and Executive Vice President, respectively, of the managing trustee of the Trust.























SIGNATURE PAGE











Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.








AFG Investment Trust D








By:  AFG ASIT Corporation, a Massachusetts


corporation and the Managing Trustee of


the Registrant.








By:  /s/ Richard K Brock


Richard K Brock


Chief Financial Officer and Treasurer of AFG ASIT Corp.


(Duly Authorized Officer and


Principal Financial and Accounting Officer)








Date:  November 12, 2004























**Exhibit Index**





31.1
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




















**Exhibit 31.1**





Certification:





I, Gary D. Engle, certify that:





1.
I have reviewed this quarterly report on Form 10-QSB of AFG Investment Trust D;





2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;





3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;





4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:





a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b)
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and





5.
The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):





a)
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and





b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting.





6.
The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.




















/s/ Gary D. Engle


Gary D. Engle


Chairman and Chief Executive Officer


(Principal Executive Officer)


November 12, 2004























**Exhibit 31.2**


**Certification:**





I, Richard K Brock, certify that:





1.
I have reviewed this quarterly report on Form 10-QSB of AFG Investment Trust D;





2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;





3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;





4.  The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:





a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;





b)
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and





5.
The registrants other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions):





a)
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and





b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls over financial reporting.





6.
The registrants other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.








/s/ Richard K Brock


Richard K Brock


Chief Financial Officer and Treasurer of AFG ASIT Corp.,


the Managing Trustee of the Trust


(Principal Financial and Accounting Officer)


November 12, 2004
































**Exhibit 32.1**





Certification Pursuant to 18 U.S.C. Section 1350,


As Adopted Pursuant to Section 906 of the


Sarbanes - Oxley Act of 2002





In connection with the Quarterly Report of AFG Investment Trust D (the Trust), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, the Principal Executive Officer of the Trusts Managing Trustee, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:





(1)  the Report of the Trust filed today fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and


(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.








/s/ Gary D. Engle


Gary D. Engle


President of AFG ASIT Corporation,


the Managing Trustee of the Trust


(Principal Executive Officer)


November 12, 2004











**Exhibit 32.2**





Certification Pursuant to 18 U.S.C. Section 1350,


As Adopted Pursuant to Section 906 of the


Sarbanes - Oxley Act of 2002





In connection with the Quarterly Report of AFG Investment Trust D (the Trust), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, the Principal Financial and Accounting Officer of the Trusts Managing Trustee, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:





(1)  the Report of the Trust filed today fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and


(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust.





/s/ Richard K Brock


Richard K Brock


Chief Financial Officer and Treasurer of AFG ASIT Corp.,


the Managing Trustee of the Trust


(Principal Financial and Accounting Officer)


November 12, 2004